Other Nuts Update:
The Outlook for 07 looks very much like a reflection of 06. Markets and prices remain stable. Prices for the major grades continue to trade in very narrow ranges. All origins are reporting normal to large crops, consumption levels are good. Supply and demand appear to be in balance, supply being greater than demand.
With the exception of interruptions to supply here as well at origins it is not believed the market will be running up. The industry is at very low production levels at this time. This will not change for sometime as the Tet Holiday is pending in Vietnam. The official dates are February 16-24th. While this is only a calendar week it will spill over into a 2-3 weeks. Additionally, the Indian cashew industry faced higher labor cost at the beginning of January and effectively they have priced themselves out of the market at this time. Based on these factors it is felt that the market here may experience a squeeze on inventories during the May, June July time frame.
Currently as has been the trend the excess in the supply chain remains in the form of seed. Processors are staying in a hand to mouth position. Buying only as much seed as they can sell. Should the excess transfer to the processors we will see downside pressure on the Kernel market.
We see a bit of a glut on scorched grades as the carryover of seed from last crop and the excess seed in the current crop remains unsold, the quality may deteriorate. This may hint at some downside pressure on scorched grades.
The anticipated Oregon Hazelnut Crop yield is down about 25 percent from a year ago. Projected tonnage for 2005 is 28,000, compared with 37,500 tons in 2004.
There are about 1,600 acres of hazelnut trees in Linn County Oregon and 400 acres in Benton County Oregon. Depending on planting pattern, growers can maintain 100 to 200 trees per acre. Older hazelnut varieties, such as Barcelona, will produce about 1,700 pounds of nuts per acre. Newer varieties, such as Ennis, will produce about 3,000 pounds per acre.
The downside to the Ennis variety is it appears more susceptible to blight, a problem that has traveled from Washington state as far south as Lane County. In its most serious stage, blight will kill hazelnut trees. Blight can be controlled to some extent by pruning and the use of chemical treatments.
It takes about eight years to establish a hazelnut orchard, with trees doubling production each year until they reach their peak. Hazelnuts then have a two-year cycle in terms of production levels. Every other year, tonnage will be up.
Oregon produces about 98 percent of the hazelnuts in the U.S. Some nuts come from Washington state and British Columbia. Worldwide, Oregon hazelnuts account for 3 to 6 percent of world production. Other key producers are Turkey, Spain and Italy.
Oregon Hazelnut Production
1998: 15,400 tons
1999: 39,700 tons
2000: 22,230 tons
2001: 49,500 tons
2002: 19,500 tons
2003: 37,900 tons
2004: 37,500 tons
2005: 28,000 tons (projected)
This year, Oregon hazelnuts will cost
$2,000 a ton, 39% higher than last year, according to the Oregon Hazelnut
Marketing Board. Take note that when a 2003 freeze nearly wiped out much of the
harvest in Turkey, the world's largest hazelnut grower, Oregon prices were $701
Hazelnut prices have grown steadily during the past couple of harvests, as a result of blight in Oregon and bad weather elsewhere.
Turkish hazelnut production is currently
estimated at 525,000 metric tons for 2005, lower than the production capacity
due to damage from last year's
frosts. With optimal weather conditions, 2006 production could reach 600,000 metric tons.
The Cashew crops in both India and Vietnam look good and are just starting to come in more heavily now. The seed price has been high which often happens in the beginning, as the arrivals are light. The prices should come down to more workable levels in the next few weeks.
We are very doubtful that we will see the lows that we saw last year. This is not because the crops are any less than last year but rather to the fact that for each of the last three years, the worldwide consumption was increased significantly. Three years ago there was a big disparity between supply and demand and that resulted in the very low prices we have been enjoying. With consumption now rising (in the US, India and China particularly) to close to the level of supply, the feeling is that, instead of a range of 1.85 to 2.10 for 320s like last year, we are more likely to see a range of 1.95 to 2.20 this year.
A number of the top and most reliable packers in India are cutting back on their production and a few are not even opening this year. They cite the low prices of the last few years as making it impossible to make money. It should be noted that if we remove the last three years from the equation, 2.05 xw on 320s still represent a 25 year low and that does not include inflation!
We may see a little weakness in the next few weeks as both crops increase in arrivals but it is unlike we will be seeing prices crash.
This year's crop Macadamia Crop was very challenging. For the second year in a row the crop came out short worldwide and demand continued to increase. The result is very high pricing and not enough product.
The Domestic Hazelnut crop is expected to be small for the "on" year. Current estimates of 35,000 tons make it the smallest "on year" crop in many years. Additionally serious drought conditions have resulted in Turkish supplies to be short as well.